The stock market is soaring to all-time highs as of late, especially within the tech sector. The S&P 500(SNPINDEX: ^GSPC) market index gained 49% over the past two years while the tech-heavy Nasdaq Composite (NASDAQINDEX: ^IXIC) index soared 68% higher. Each market trackers traded about 1% below their record prices on Thursday, Nov. 14.
But every tech stock didn’t get the memo about this sustained surge. Despite playing energetic and lucrative parts in the substitute intelligence (AI) boom, Advanced Micro Devices(NASDAQ: AMD) and Micron Technology(NASDAQ: MU) are trading greater than 30% below their peak prices.
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I believe each Micron and AMD are excellent AI investments because of their recent discounts. Let’s take a better take a look at these underappreciated AI winners.
These AI hardware specialists work within the shadow of more popular rivals, led by Nvidia. They stand with each feet contained in the AI opportunity, though. Here’s what it’s essential to learn about Micron’s and AMD’s AI products.
AMD designs high-performance computer processors. Its product portfolio includes the Ryzen line for desktops and notebooks, the Epyc range of server-grade chips, and the Instinct collection of AI computing accelerators.
The Instinct chips go head-to-head with Nvidia’s AI accelerator solutions, and you regularly find AI supercomputers managing the AI accelerator computations with Epyc processors. System builders can pair AMD or Nvidia accelerators with AMD and Intel server processors, and almost every combination is found among the many world’s largest supercomputers in 2024.
Nvidia and AMD AI accelerators are bundled with a ton of high-speed memory. One Nvidia H200 card comes with 141 gigabytes (GB) of accelerator memory. AMD’s rival Instinct 205X has 128 GB of fast memory.
And there is more: These massive memory stores don’t include the memory tied to the Intel or AMD processors running the show. Nor do they account for the memory-based solid-state devices (SSD) that provide long-term storage for these computing beasts.
And that is just the back end of the AI business. Smartphones and other consumer-facing devices with AI features also require more memory than older devices without AI. As a number one maker of high-speed memory chips, Micron advantages directly from this surging memory demand.
The AI market is greater than a future opportunity for these firms.
AMD’s third-quarter sales jumped 18% 12 months over 12 months, driven by a 122% surge in the info center segment. That is the division accounting for AMD’s Epyc and Instinct chips, that are utilized in AI servers.
In Micron’s recent fourth-quarter report, revenue rose 93% 12 months over 12 months. Again, the fuel for this hearth was “robust AI demand” and soaring data center sales, the report said.
Each stocks look expensive for those who concentrate on their reported results. AMD trades at 124 times trailing earnings and 145 times free money flow. These metrics stand at 147 and 909, respectively, for Micron. So I get it if traditional value investors are staying away from these stocks.
However the chip experts are getting back from an prolonged downturn in the semiconductor sector, held back by a stubborn shortage of producing capability and the recent inflation crisis. Switching to a forward-looking perspective, AMD shares are changing hands at 27 times next-year earnings estimates, and Micron’s forward price-to-earnings ratio stops at 7.7.
So I believe it’s an enormous mistake to jot down off Micron and AMD as overpriced growth stories. It just took a while to beat recent back-end challenges and deliver robust bottom-line profits again. These AI stocks look tempting at once, and I highly recommend picking up a number of shares while they’re low-cost.
Ever feel such as you missed the boat in buying probably the most successful stocks? You then’ll need to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock suggestion for firms that they think are about to pop. In case you’re apprehensive you’ve already missed your probability to take a position, now could be the most effective time to purchase before it’s too late. And the numbers speak for themselves:
Amazon: for those who invested $1,000 once we doubled down in 2010, you’d have $23,818!*
Apple: for those who invested $1,000 once we doubled down in 2008, you’d have $43,221!*
Netflix: for those who invested $1,000 once we doubled down in 2004, you’d have $451,527!*
Straight away, we’re issuing “Double Down” alerts for 3 incredible firms, and there might not be one other probability like this anytime soon.
Anders Bylund has positions in Intel, Micron Technology, and Nvidia. The Motley Idiot has positions in and recommends Advanced Micro Devices, Intel, and Nvidia. The Motley Idiot recommends the next options: short November 2024 $24 calls on Intel. The Motley Idiot has a disclosure policy.